Even if you and your spouse have to decide what to do with your family home as you divorce, rental property can be a more complicated matter. Whether you rent out a previous house or condo to full-time tenants or you list a property on vacation rental sites, it can be a lucrative investment for you.
If the rental is determined to be marital property, either because you’re both on the title or you’ve both contributed substantially to its upkeep and improvements, you’ll need to work out how you’re going to deal with it. While you probably don’t have the emotional attachment to the rental that you have to the home you’ve been living in, you may be attached to how much income it’s brought you.
Can you continue to work together as property owners?
If you both want to keep the property and you believe you can continue to work together to the extent you will need to, you can keep it, of course. However, you need to put an agreement in place detailing how the costs and profits will be divided. Unless you’re having a property management company deal with the rental agreements, repairs and other responsibilities, you should also determine how those responsibilities will be divided.
The other two options are basically the same as they’d be for a family home. If only one of you wants it (to continue to rent out or perhaps to live in full time), they can buy out the other spouse’s share and become the sole owner. If neither of you wants to continue to deal with it and you can use the money you’d make from selling it as you start your separate lives, you can do that.
Whatever you decide to do, it’s important that you work to get a fair deal in your divorce settlement. When you’re dealing with high-priced and/or multiple real estate properties, it may be wise to add a real estate advisor to your divorce team.
